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Nike Management Announces that ‘Basketball Is Back’

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Sportswear and Running segment strong as Basketball segment rallies

Nike (NKE) is the largest seller of athletic footwear and apparel in the world. Footwear accounts for about 60% of the company’s total sales.

In fiscal 2Q17, footwear sales rose 5% while apparel sales increased 7% compared to fiscal 2Q16. The Sportswear category posted its 12th consecutive quarter of double-digit growth, growing in the high teens during fiscal 2Q17. Running, Nike’s largest performance category, also recorded double-digit growth.

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Basketball is back

Basketball sales regained the momentum it had lost over the last year. The company redesigned products that failed to click with the customers.

While taking about the segment’s excellent performance, Trevor Edwards, president of Nike Brand, commented, “Basketball is back.” He added, “The company’s basketball business is much healthier today than it’s ever been over the past 18 months as the company redesigned products with stronger aesthetics and delivered better-priced value.”

The LeBron Soldier 10, Kobe A.D., Kyrie 2, KD 9, and Jordan 31 were the key performing categories during fiscal 2Q17. Based on a robust second quarter, the company’s management expects Nike Basketball to return to growth in second half of fiscal 2017.

Innovation is Nike’s driving force

Nike (NKE) launched several innovative footwear and apparel styles during the year, which boosted its sales. Among the most talked-about styles was its HyperAdapt 1.0 platform of self-lacing shoes. Priced at $720, these self-lacing shoes were launched in late November after years of development. Each HyperAdapt shoe has a sensor attached to an internal cable system. Once the foot is placed inside, the cables automatically tighten up based on an algorithmic equation.

While these shoes had no impact on the company’s fiscal 2Q17 sales, they should be worth watching in the second half of the fiscal year. The success of this platform could help Nike in regaining the market share it lost to Under Armour (UAA), Adidas (ADDYY), and Lululemon Athletica (LULU) lately.

ETF investors seeking to add exposure to NKE can consider the SPDR Consumer Discretionary Select Sector ETF (XLY), which invests 3% of its portfolio in NKE.

You can read about Nike’s performance in its various markets in the next part of this series.

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